From: Reuters
Published December 7, 2007 09:37 AM

Barroso seeks to end EU row over car emissions

By Paul Taylor

BRUSSELS (Reuters) - European Commission President Jose Manuel Barroso has stepped in to try to resolve a row between industry and environment commissioners over fining carmakers who fail to meet EU pollution limits.

Amid fierce lobbying, the European Union executive is due to adopt regulations on December 19 on how to enforce an average limit of 120 grams per km in carbon dioxide emissions by 2012 -- part of the bloc's ambitious strategy to combat climate change.

But German Enterprise Commissioner Guenter Verheugen, regarded as close to his country's powerful automobile industry, is at loggerheads with Greek Environment Commissioner Stavros Dimas over penalties for those who do not meet the targets.

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A Commission spokesman denied a report in Germany's Handelsblatt on Friday that Barroso had taken the file out of the hands of the two commissioners, who have been feuding since before the EU executive adopted the headline goal in January.

But spokesman Johannes Laitenberger said: "The president has decided to take a closer look at this work. It does need some serious work being put into it. We've got to work on this calmly and avoid any kind of excitement about this."

The intention was still to reach a decision by consensus before the end of this year, he said.

The leaders of the main west European countries with big auto companies -- Germany, France and Italy -- have each written to Barroso demanding leniency in sharing out the burden of CO2 emissions curbs on their manufacturers, an EU source said. A British minister has also put London's concerns in writing.

"We have received a number of letters from a number of member states as is usual in this sort of case," a Commission spokesman said.

SANCTIONS NEEDED

Barroso made clear in a German newspaper interview last month that sanctions were essential to make the system work.

"There should be consequences if manufacturers do not respect the threshold value. They should pay a sort of compensation. Otherwise, the system would not be very credible," he told Bild am Sonntag.

Data published by an environmental pressure group last month showed average emissions of CO2, the greenhouse gas most blamed for global warming, from new cars made by German firms actually rose by 0.6 percent in 2006.

French and Italian producers cut pollution from their vehicles by 1.6 percent, but Germany produces heavier cars.

The Commission decided in January that carmakers would be required to achieve 130 g/km through engine technology, while use of biofuels and other measures to improve vehicle energy efficiency would help achieve the overall 120 g/km goal.

The weekly European Voice quoted German government sources as saying Brussels favored charging carmakers 90 euros ($131) per gram and per car for excess emissions. But an EU source said that was the highest of three possible levels being considered, and 10 euros per gram was the lowest.

The criteria used to calculate fines would be those of the EU's emissions trading scheme, under which countries are limited in the amount of CO2 their industries may emit but users may trade emissions permits, he said.

However, early ideas of incorporating cars into the ETS or allowing carmakers to trade emissions permits among themselves have been dropped, he added.

The other key issue yet to be decided is the so-called slope of the curve in how CO2 cuts are shared out relative to the weight of the vehicles each manufacturer sells, the source said.

Germany wanted a steep slope line to protect its premium car makers, BMW and Mercedes, while France wants a flatter curve reflecting the interests of its mid-market producers, PSA Peugeot Citroen and Renault.

"What is striking is that as you bore down into the detail, you see the splits within the car industry becoming wider," another EU source said.

Previously, the car industry lobby ACEA acted as the main voice for the sector, but now individual carmakers are lobbying the Commission in support of their different interests.

(Additional reporting by Jeff Mason; Editing by Quentin Bryar)

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